KeyBank 2008 Annual Report Download - page 9

How is last year’s acquisition of U.S.B. Holding Co. in New
York State working out?
That acquisition doubled Key’s branch network in attractive
communities outside New York City. I visited offices in the
Hudson Valley District last year and I watched with no small
measure of pride how hard our team worked to fully integrate
our processes and culture. The enthusiasm was remarkable,
and so was the progress.
Obviously, confidence in Key and the banking system gen-
erally is an important consideration in uncertain markets.
Has Key taken extra steps to communicate its safety and
soundness?
Consumers and business managers are justifiably concerned
when they read headlines about troubled financial services
companies and bank closures. So, as industry problems re-
mained in the headlines, we stepped up our client communi-
cations and armed our front-line teams with the information
needed for them to emphasize Key’s safety, soundness and
increased deposit insurance guarantees. In fact, we used
the external events to reinforce our relationship-banking
approach by supplying guidance and good information to
our clients. The response of our branch sales forces and teams
in all business groups helped to spur the deposit and loan
growth we enjoyed in virtually all of our 23 districts this year.
MANAGING IN CHALLENGING TIMES
You have rebuilt your senior management team over the
last five years. How would you characterize the value of
leadership in these markets?
Strong management and leadership are vital in these diffi-
cult times. I think our leadership group has a strong track
record, and the experience and caliber of our team has
served us well. I believe we are focused on the right goals
and we are making effective decisions in our efforts to
achieve them. We are working very hard to be careful
stewards of the public trust, adjusting our mix of businesses
to minimize risks and maximize returns. We strive to commu-
nicate forthrightly with our stakeholders to ensure their
confidence in our people, products and services.
Peter Hancock is the latest addition to the senior manage-
ment group, joining Key in December as vice chair, Key
National Banking (KNB). What do you see as Peter’s unique
skills and value to the company and leadership team?
Peter’s thirty-year background in capital markets, risk man-
agement, and corporate banking brings deep strength to
our senior management team in an environment where the
relationship between finance and risk is so important. Peter
is a former CFO of J.P. Morgan, where he was also Chief Risk
Officer. He has built and led high-performing teams and or-
ganizations. His skills complement those of the executives
who lead our KNB business groups. It’s a pleasure to have
Peter on the team.
Are there any changes on the Board of Directors?
Ralph Alvarez, who joined the Board in 2005, has notified us
that he will not stand for re-election at the Annual Meeting
for personal reasons. Ralph provided invaluable insight and
guidance during a period of unprecedented turmoil, and we
sincerely thank him for his outstanding service and wise
counsel. We will miss him. Pending shareholder vote, we
will welcome Kristen Manos to the Board effective with the
May 21, 2009 shareholder meeting. Kristen formerly was
Executive Vice President of Herman Miller, Inc., and we look
forward with anticipation to her contributions in the areas of
marketing, sales and client service as we continue to build on
our substantial progress in these areas in recent years.
LOOKING AHEAD
Henry, what do you see ahead for Key?
As always, there will be things we can control, and things
we can’t. We certainly can’t control the overall economy or
the capital markets. So, our management and Board have to
stay keenly focused on the keys to our own success. We’ll
work to sustain our capital strength. We’ll diligently manage
our costs. We’ll continue to broaden and deepen our rela-
tionships with clients. And we’ll manage our risks as tightly
as we can.
As mentioned at the outset, I believe that 2009 will be
every bit as challenging as 2008. How rapidly Key and the
industry recover depends in part on the length and depth of
the recession. We believe we have positioned the bank to
weather the economic storm, but we are very mindful that
the nation is experiencing unprecedented financial turmoil
that could extend well into 2009 — and even beyond.
At the end of the day, what gives you confidence that Key
will survive and prosper?
KeyCorp’s fundamental strength rests in its client relation-
ship strategy, fortified capital position, mix of businesses,
and its continued focus on risk management. The market
environment facing Key and the industry in 2008 was
without precedent, and all market participants, including our
regulators and government leaders, found themselves in
uncharted territory.
While KeyCorp has not completely avoided the issues, we
have chosen to proactively address our risk and business
mix from the outset, making tough decisions and taking
steps we believed were required to fortify the company
for the challenges and opportunities — both known and
unknown — that may lie ahead.
Key 2008 • 7